The IMF decision to strengthen the Chinese yuan
The Chinese yuan is gaining weight and has been strengthened in the composition of the SDR, the IMF’s unit of account, reinforcing the Chinese currency’s status as an international reserve currency and pushing down the share of the euro, yen and British pound.
The IMF raised the weighting of the yuan, or renminbi, from 10.92 percent to 12.28 percent in the new valuation of the SDR (Special Drawing Rights), the IMF’s unit of account that serves as an international reserve asset, according to a statement. This represents an increase of 1.36 percentage points.
The SDR was created in 1969 and is a basket of five major international currencies, the dollar, the euro, the British pound, the Chinese renminbi or yuan and the Japanese yen. The Chinese currency had entered in 2016 the very closed club of major international reserve currencies by joining the SDR.
This had been hailed as a historic and symbolic step in the internationalization of the renminbi, sought by Beijing in its quest for international economic recognition. At the end of the five-year review by the IMF of the weighting of this basket of currencies that is the SDR, the weight of the dollar was also raised to represent 43.38% instead of 41.73%, said the IMF in a statement.